China's biggest steelmaker has seen its profits plummet as it faces what observers believe will be a flood of foreign steel into its domestic market.

Now that the US has slapped tariffs on steel imports in an attempt to protect its own industry, exporting countries are thought likely to look to China's huge and booming economy as an alternative market.

Baoshan Iron & Steel's admission that net profits for the first three months of the year were 39.5% lower than last year therefore comes at a bad time.

The company, the fourth biggest in the world by market capitalisation, said it made a profit of 547.8m yuan ($66.3m; £45.4m) for the three months, on sales which fell 2.3% to 7.09bn yuan.

Flooding in

The losses at Baosteel, as it is known, follow a 14.4% fall in profits for 2001 as a whole from the previous year.

"In the first quarter of 2002, the domestic and international steel markets were sluggish and the prices of our core products such as cold-rolled and hot-rolled steel plates fell 11% year on year," it said in a statement.

Imports have surged since the US introduced selective tariffs of up to 30%. China's newly-minted membership of the World Trade Organisation and the lower tariffs it brings with it is also encouraging other countries to get in on the act.

Baosteel is now asking for government protection.

Help is on the way, in the shape of anti-dumping investigations launched against cold-rolled steel imports from South Korea, Russia, Taiwan, Ukraine and Kazakhstan.